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The UK's Financial Services Authority has handed a Â£1.1m (â¬1.4m) penalty to the UK mortgage lending arm of the conglomerate General Electric, in what is the first fine imposed by the regulator relating to a group's lending processes.

GE Money Home Lending was found guilty of "systems and control failings that resulted in 684 borrowers with a regulated mortgage contract suffering financial loss in excess of £2.3m before redress was later paid to them by the firm", according to a statement from the FSA.

The regulator had initially sought to impose a fine of £1.6m but GE Money Home Lending agreed to settle at an early stage of the proceedings and in doing so, received a 30% reduction on the penalty. It is the first time the FSA has fined a mortgage lender in relation to its lending processes.

Margaret Cole, director of enforcement at the FSA, said: “The firm’s failings were serious because a large number of borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss.

"The firm identified the systems and control failings in 2004, but despite internal recommendations that improvements be made, no corrective action was taken for more than two years. ”

The customers affected were those whose mortgage contracts were subject to a retention clause. According to a statement by the FSA, the firm's mortgage terms and conditions did not make it clear to all customers that they would be charged interest on the full mortgage loan, including the retention monies, during a six month retention period.

The statement from the FSA also said that the lender continued to charge some borrowers interest on retention monies beyond the six month retention period. This resulted in some borrowers overpaying the group when redeeming their mortgage.

GE Money Home Lending has also reviewed non-regulated mortgage contracts with retention clauses entered into before mortgage regulation began. In total, including both regulated and non-regulated mortgage contracts, it has paid 5,245 customers a redress of £7m in relation to their mortgage retentions.

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Colin Shave, chief executive at the mortgage lender, said: “We regret the events which led to this situation and, although the number of affected borrowers was small compared to our overall customer base, we sincerely apologise to those who were affected."

Separately, its parent General Electric cut its third-quarter profit forecast earlier today and suspended its current stock buyback because of ``unprecedented weakness and volatility' in the financial market.

According to a statement from the company, profit this quarter will be 43 cents to 48 cents a share, less than its previous forecast of 50 cents to 54 cents. The company also said it would bolster its capital and liquidity position in a bid to maintain its "AAA" credit rating.

The Securities and Exchange Commission on Monday added General Electric to the list of stocks investors could not short, after leaving the conglomerate off the original list of firms protected by the ban on Friday September 19.